September 2, 2015 

The Honorable Thomas E. Perez 

Secretary of Labor 

United States Depa1imcnt of La~or 

20 I Constitution A venue 

Washington, DC 202 I 0 

Dear Sccrctat)' Perez. 

Pre:;1i!rnt U11ef 

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Thank you for meeting with me to discuss TIAA-CREF's views on the proposed Conllict oflntercst Ruic, 

as well as ways to ensure that lifotimc-income solutions are more readily available to American workers. I 

appreciate the work you and your staff have done, and continue to do, to address key concerns many 

Americans face in attaining a comfortable and secure retirement. 

As I mentioned in our meeting, TIAA-CREF has always been committed to acting in our clients' best 

interest. We suppo11 the Department's efforts to make this an industry standard, including in the rollover 

context. We do have some technical concerns with the proposal, which we have highlighted in our 

comment letter. However, we were encouraged by what we heard at the recent hearings on the rule 

proposal, in particular that the Department does not intend to constrain education or restrict the sale of 

proprietary annuities. In particular, we have been heartened to hear you and your staff suggest that to rise 

to a •·recommendation," the adviser must issue a "call to action." We believe it is very important that the 

final regulation reflect this language. Additionally, we believe it is essential for the Depmiment to 

confirm that under the rule, annuity providers could still offer plan participants proprictal)1 annuities. In 

this regard, we also were encouraged by Department officials' indication that the Department does not 

intend to prohibit sales of proprietary products. We would like to work with the Department to ensure the 

final rule achieves this shared goal. 

As you explained, the ''North Star" for this proposal is an enforceable best-interest standard, and the 

Department recognizes that certain aspects of the proposed "Best Interest Contract" exemption are 

infeasible. You indicated that the Department is moving in a direction that our comment letter suggested, 

including that the contract be between the investor and the firm (but not the adviser) and that no contract 

be required before a relationship is established. Additionally, we would urge that the final rule eliminate 

thc proposal's requircmcnt to include specific warranties in the contract, and that the final rule also 

simplify disclosure obligations so that they arc useful to investors and feasible for providers. We would 

very much like to take you up on your request that we provide our "best thinking" on how the Department 

can foasibly achieve this North Star. Members of my staff will reach out to your team to set up a meeting 

to exchange ideas. 

I am also grateful for the opportunity to discuss with you the related issue of in-plan lifetime income 

solutions. We believe annuities are a key piece of the retirement puzzle for the average \Vorker, yet many 

do not have efficient and cost-effective access to d1ese products. Unfortunately, the existing Qualified 

Default Investment Alternative (QDIA) regulations have impeded adoption. 

tiaa creLorg 730 Third Avenue, New York, NY 10017~3206 
QDJA regulations have been integral to ensllring participants are investing appropriately when defaulted 

into a retirement plan, primarily through target-date funds (TDFs). But in the existing framework, lifetime 

income products - including target-date funds with annuity sleeves - have largely been absent from 

QDIA offerings. To highlight the importance and necessity for such changes, consider that an SEC study 

found that 64% of investors believe TDFs provide guaranteed income in retirement - even though very 

fow TDFs include true lifetime income features. Despite the widespread desire for lifetime income from 

retirement plans, only I 0% of plan sponsors offer an in-plan annuity product and only 2% of lhose 

without an annuity product are likely to add one in the coming year. 

We have developed a common-sense solution that addresses this issue by embedding annuities within a 

TDF structure, effectively providing an "in-plan" annuity solution that provides higher potential returns 

than cash or short-term fixed income investments during the accumulation phase - while also providing a 

seamless transition into retirement through built-in access to lifetime income solutions at distribution. We 

recognize that resources constrain the Department's ability to undertake a fu.U regulatory project to make 

it feasible to offer our product as a QDIA. Nonetheless, a Field Assistance Bulletin or an Interim Final 

Rule would provide significant comfort to plan sponsors wishing to incorporate lifetime income into a 

QDIA target-date solution. My staff will also follow up with your team to discuss this issue in further 

detail. 

Thank you again for sitting down with me to consider our views and discuss ways to improve the current 

retirement landscape. As you can see, this is a vital issue for TIAA-CREF and the 4.2 million individuals 

and 15,000 institutions we serve. I welcome any additional questions you may have and invite you and 

your staff to reach out to us at any time. 

Best regards, 

cc: ~'l Judy Mares, Deputy Assistant Secretary of the Employee Benefits Security Administration 

Ali Khawar, Counselor to the Secretary